A Dearth of Economics Doctorates
Leads to Royal Recruiting Battles
By JON E. HILSENRATH
Staff Reporter of THE WALL STREET
During the last month, Julie Mortimer has been flown around the country
on all-expense-paid trips to Chicago, Boston, New York and San Francisco.
She's been wined and dined at the upscale Rialto restaurant in Harvard
Square and wooed through e-mail by Gary Becker, a Nobel Prize winning
economist at the University of Chicago.
Such fawning used to be the calling card of high-profile fields such as
consulting and investment banking. But 28-year-old Ms. Mortimer is part of
a new contingent of hot job candidates: students with doctorates in
economics who want to teach.
Traditionally, the job search for these entry-level college professors
has been a long battle that ended with poor pay in a dingy, ill-equipped
office. New economics professors "used to get a computer and a couple of
thousand bucks" to start, says Lawrence Katz, who runs Harvard's recruiting
effort for economics scholars.
But these days, a confluence of events including a scarcity of economics
Ph.D.s and a rise in students clamoring to study economics means that even
low-level candidates are treated like big shots. Pay for entry-level
economics professors has risen by about 15% since 1999, according to a
University of Arkansas study. And this year's crop of top doctoral students
have seen universities sweeten offers for assistant-professor jobs with
light teaching loads, early sabbaticals, $20,000 research budgets and
$15,000 in summer pay. That's on top of the $70,000 to $80,000 salaries
they already are offering for a nine-month school year. Those who focus on
finance are getting even sweeter offers with many business schools offering
Ms. Mortimer, a former management consultant who impressed professors
with a study on the economics of the video-rental industry, canceled 11
interviews after she corralled offers from Harvard, the University of
Chicago and Northwestern University's Kellogg Graduate School of
Management. She's received two additional offers since, but she's not
deciding until she figures out where her husband will land. He's also a
doctoral candidate, and has gotten seven offers from consulting companies
and the government. "The whole market has really gone much better than I
would have expected," says Ms. Mortimer, who earned her undergraduate
degree at Carlton College in Minnesota in 1994.
The hot market for young economists might seem odd with the economy
slowing and layoffs mounting. But supply and demand helps explain it. On
the demand side, college economics departments are faced with increased
competition from high-paying consulting companies and business schools who
trawl the annual American Economics Association meeting in January for
young talent. Professors say Wall Street firms are also in the hunt for
Ph.D.s with a financial focus.
Simultaneously, undergraduate enrollment in economics classes has been
rising after a big slump in the early 1990s, putting pressure on schools to
bring in more professors. At top schools, including Harvard and Princeton,
the number of undergraduates majoring in economics is up 37% from 1995,
says John Siegfried, a Vanderbilt University professor who tracks the
At schools like Harvard or Columbia, which don't house undergraduate
business departments, economics now is the most popular major on campus.
Harvard's introduction to economics class -- taught by Martin Feldstein, an
adviser to President George W. Bush during his campaign -- is packed with
900 students in a typical year. At Columbia, the number of students taking
macroeconomics has risen from to 455 from 164 since 1991. Even at
engineering-oriented Massachusetts Institute of Technology, economics
accounts for about one-tenth of undergraduate majors.
"People feel an economics degree is going to be helpful as they decide
that their career paths may take them into business schools or consulting
or financial markets," says Richard Clarida, chairman of Columbia's
Hungry for teaching and research talent, Mr. Clarida three years ago led
a high-profile effort to lure Robert Barro, a superstar Harvard economist,
over to Columbia with a salary reported at $300,000. Mr. Barro backed out,
but the following year Mr. Clarida turned his recruiting battle to focus on
young assistant professors and brought in six. Harvard last year hired five
new Ph.D.s, a large number considering that its staff just numbers 40.
Princeton, which recently began a new finance program, is adding four or
five economics positions to a faculty of 47. Public universities are also
Then there's the supply side. Ironically, despite the demand from
undergraduates, fewer Americans are choosing to go all the way down the
doctorate path. Vanderbilt's Mr. Siegfried estimates that this year,
universities will turn out no more American economics Ph.D.s than it did
during the presidency of Dwight Eisenhower.
"Students who would have gone on for [advanced] degrees in economics in
the past are going for M.B.A.s and law degrees," says Gary Becker, the
Nobel prize winner from the University of Chicago. "The financial rewards
are greater and they come quicker." A typical doctorate takes five years to
complete, a big opportunity cost for a young professional. Added to that, a
glut of academic scholars who enrolled during the years of the Vietnam War
from the mid-1960s to the early 1970s are now near retirement.
Helping to fill the void are foreign students like Ali Hortacsu, a
Turkish-born Stanford doctorate candidate. Five years ago he decided to
drop electrical engineering and turn to economics. While acquaintances were
heading off to dot-com start-ups, like eBay, the online auction house, "I
said, 'No, I'm not going to take a risk like that,' " he says. Instead he
went back to school and spent years plodding through economic theories
about how auctions work. He wrote papers on eBay and Turkish bond auctions
and walked away from last month's recruiting battles with six job offers
that he's still weighing.
George-Marios Angeletos, a 25-year-old Harvard economics scholar
originally from Greece, says he had an offer to teach at the University of
Chicago's business school on a six-figure salary before he even started
Ground zero for the talent chase was in New Orleans in early January.
Just a few minutes from Bourbon Street, young Ph.D.s packed in 10
interviews a day for three days at the annual American Economics
Association conference. Like professional basketball teams who check a
player's vertical leap in their predraft meat markets, professors were busy
prodding for Mr. Angeletos's mastery of the optimal maturity structure of
noncontingent debt and Mr. Hortacsu for nuances in his theories about
Turkish bond auctions. Those who performed best were flown in by
universities to give lectures to faculty, followed by dinner and
As for Ms. Mortimer, she says she's been getting encouraging e-mails
from Mr. Becker since her "fly-out" to the University of Chicago. "I was
very nervous before the whole thing started," she says. But now she's just
trying to keep track of her options.
Write to Jon E. Hilsenrath at